La Jornada: Conversion of Nu to a bank will cause a recomposition in popular financial institutions

Nu’s transition into a bank will mark a before and after within the sector of popular financial companies (Sofipos). Once the firm begins to operate as a bank, the popular finance sector will lose the institution that concentrates more than 50 percent of its assets, according to official information from the National Banking and Securities Commission (CNBV).

The reconfiguration will be greater in other industry indicators, since Nu also has more than half of the deposits saved by savers in Sofipos and just over a third of the total credit portfolio, according to the most recent figures from the regulatory body.

On Friday of last week, Nu received authorization to begin operating as a private banking institution, a license it sought for almost 3 years. Since 2022, the Brazilian firm operates as Sofipo and has one month to make its transition to a bank.

According to the latest information published by the CNBV, at the end of April, the Sofipos sector had assets totaling 216,147 million pesos, of which 118,751, or the equivalent of 54 percent, were in the hands of Nu.

The company has 15 million clients in Mexico, and focuses on two areas: credit cards – it is one of the main five new card issuers in the country – and on attracting resources from the public, with returns that are above 10 percent.

Jorge Tello, senior financial sector analyst, indicated that the authorization obtained by Nu represents much more than a change in legal status, as it confirms the consolidation of digital banks within the Mexican financial system and accelerates the transformation of the industry.

In turn, Álvaro Vértiz, also a financial sector analyst, explained that the arrival of Nu as a bank will increase competition in more profitable businesses for traditional financial institutions, particularly in consumer credit, fundraising and investment products.